While GDP figures show 0.3% growth over the last quarter, some business sectors are performing against the odds and experiencing exceptional growth. Barclays Online Business Outlook 2013 released this week has revealed that companies that operate online are thriving, with half of those questioned having produced double digit growth in the last three years. The average online company surveyed experienced 11.4% compound annual growth over the last three years, that’s over 50 times the rate of the economy over the same period.
Sean Duffy, managing director and head of technology, media and telecoms at Barclays, commented: “Online businesses have bucked the trend over the last three years and experienced success in spite of the stagnant economic conditions. While today’s GDP figures show some growth in the economy, these businesses are optimistic about what the year ahead holds and we think they are in a strong position to sustain the growth they have experienced over the last few years, providing they can take advantage of new and rising trends.”
In a new survey, conducted by commercial finance broker Touch Financial, almost two thirds (59 per cent) of businesses questioned had applied for additional funding, such as a bank loan or an overdraft, at some time in the past six months. Incredibly, almost the same number (55 per cent) had seen their application declined.
In addition, a third of those refused (31 per cent) were given no reason by their bank as to why their application for finance had been unsuccessful. Furthermore, four in five (80 per cent) of those businesses refused bank funding were not given any information on alternative sources of funding.
Touch Financial commissioned the survey to expose the current absence of adequate funding provision for SMEs, and the impact on business confidence. The results have confirmed that an overwhelming majority of small businesses do not feel supported by the UK banks, while almost all agree that the Government could and should be doing more to help.
Perhaps unsurprisingly, in answer to the question ‘Do you believe that banks are supporting small businesses?’ more than four in five (81 per cent) of businesses responded ‘No’. Simon Carter, director of Touch Financial, is concerned that the help that the Government has promised has not been forthcoming: “Any business, regardless of size or sector, should be given access to finance, if not through ‘traditional’ bank lending, then via a number of alternative funding solutions that are available,” he says.
When asked ‘Is the Government doing enough to support small businesses?’ only two per cent responded ‘Yes’; more than half (56 per cent) of respondents answered ‘No’ and the remaining 46 per cent answered ‘Could do better’. Moreover, when asked about their awareness of a number of Government and bank-led initiatives, more than two in five (42 per cent) had never heard of any of them; the highest awareness was for Start Up Loans, which only a third (33 per cent) of respondents had come across.
“Small businesses simply aren’t getting the information and the support that they need if they are to be the primary engine for growth as the Government has suggested,” said Carter. “SMEs are in danger of being left up the proverbial creek and being told there are no more paddles.”
Cash-strapped British businesses have declared their support for business minister Michael Fallon’s proposals to name and shame the members of the FTSE 350 refusing to sign up to the Prompt Payment Code.
Sixty-nine per cent of business owners and finance directors questioned in Hilton-Baird Collection Services’ annual Late Payment Survey believed Fallon was doing the right thing in threatening to disclose the names of those ignoring repeated requests to join the code.
This support comes after their businesses had to wait an average of 21 days beyond agreed credit terms to be paid by customers during 2012, according to the research conducted by the leading debt collection agency. This represents an increase of four days from 2011 and highlights the escalating problems businesses are facing with regards to getting paid on time.
Thirteen per cent of businesses said they were forced to write off more than five per cent of their turnover over the past 12 months, with 38 per cent classifying over 10 per cent of their debtor books as more than 90 days old.
Managing director of Hilton-Baird Collection Services, Alex Hilton-Baird, commented: “Businesses are firmly behind Michael Fallon’s attempts to encourage the country’s largest firms to improve their payment performance. Whether this will have any effect remains to be seen, however, as it isn’t just large corporates that are culpable. Late payment is occurring right the way through the supply chain.
“These numbers are simply unmanageable for the vast majority of businesses, particularly when you take into consideration the range of other pressures on their cash flows at present. In many cases businesses are having to wait more than 60 days, sometimes more, to be paid after providing goods or services. Given this, it is obvious why the economy is caught in a state of flux.
“It is absolutely essential that businesses of all sizes use the most appropriate credit management strategies in the coming months to safeguard their cash flows against this critical problem.”
The response by businesses to this year’s Budget has been muted, with some SMEs praising increased capital expenditure, a reduction in corporation tax and changes to the PAYE system, while others have said the Chancellor did not go far enough to help the UK’s small businesses.
The rate of corporation tax is to be cut by a further one per cent – it’s currently 28 per cent, but is due to fall to 24 per cent next month and then to 21 per cent in 2014. In 2015, it will fall to 20 per cent. The fuel duty increase scheduled to come in this September has been scrapped.
An extra £3 billion a year is to be spent on infrastructure projects, while £12 billion has been earmarked to help home buyers get a mortgage on a new build property, throwing a potential lifeline to housebuilders.
Meanwhile, George Osborne said he is cutting employers’ National Insurance from April next year, potentially saving SMEs up to £2,000, with some SMEs paying no NI at all.
However it wasn’t all good news. The rate of growth in the economy was vastly overestimated and is now predicted to be just 0.6 per cent – Osborne hinted that the first quarter of 2013 would also be in negative growth.
John Cridland, CBI Director-General, said: “The CBI was clear this Budget needed to deliver a good dose of business and consumer confidence, while being necessarily fiscally neutral.
“We’re particularly pleased our call for a focus on the short-term boost of housing has been heeded, alongside an increase in longer-term big ticket infrastructure spending.
“This was recognition it was a mistake to cut capital spending so sharply and that other growth-boosting measures were taking too long. But by shifting £6bn to housing and infrastructure, the Government has sowed the seeds for growth and jobs.
“An extra one penny cut in corporation tax will also make the UK one of the most internationally competitive locations in which to do business.”
Sean McCann, personal finance specialist at NFU Mutual, said: “We all expected some relatively slim pickings from the Chancellor but overall, this Budget is a pretty good deal for entrepreneurs.
In February 2013 total Scottish sales increased by 0.7 per cent compared with February 2012, when they had declined by 0.6 per cent. Like-for-like sales decreased by 0.1 per cent on last February, when they had declined by 1.7 per cent. Taking account of shop price inflation at 1.1 per cent, February total sales were down 0.3 per cent in real terms.
Total food sales were 2.0 per cent up on February 2012, when they had risen by 3.4 per cent. This was the weakest growth since July, excluding Christmas.
Total non-food sales declined by 0.5 per cent on a year earlier when they had decreased by 4.4 per cent. This was the strongest performance since March, excluding Christmas.
While the gap with the UK widened in February, the 3-month average for Scotland is the strongest since April 2011.
David Martin, head of policy, Scottish Retail Consortium, said: “This is an encouraging result with February being the third consecutive month of Scottish sales growth and the best three-month average in nearly two years. However, total sales didn’t measure up well against those in January and in real terms were down 0.3 per cent. This reminds us that the economy and trading environment remains fragile.
“Non-food sales continued to rebound in February, showing the strongest performance since March 2012 if pre-Christmas trading is excluded. Electricals drove much of this growth but furniture and flooring also did well.
“The gap between Scottish sales growth and that for the UK as a whole widened again in February returning to what has been the norm for around two years. All in all, however, this is a satisfactory showing and should be welcomed with cautious optimism.”
David McCorquodale, head of retail, KPMG, said: “February’s performance delivered a third consecutive month of growth for the Scottish retail sector, which will give retailers reasons to feel fairly upbeat as we head into Spring.
“The tendency for Scottish schools to take shorter half term breaks than their English and Welsh cousins meant that non-food sales didn’t quite feel the uplift seen in the South, despite being against soft comparables last year. However, the decline was not as steep as it’s been for some time and will thus be viewed with some relief.
“Retailers will now be hoping for an even stronger March, buoyed by Mother’s Day and Easter falling in the same month. The hope is that next week’s budget will deliver a fillip to stimulate consumer spending in the long term, and provide a much needed boost to the sector.”